NH Korindo Sekuritas Indonesia
The incline in SSSG coupled with the incline in gross sales were posted by
all stores in Jakarta, Java Island, and non
-
Java. It also posted the increment
of 65% in the total transactions compared to 3Q17’s total transactions.
In 2017, it actively performed a number of strategies to boost its market
share, such as the use of
big data analytics
for figuring the trend of
consumer behavior. The increment of 47% in loyalty membership program
caused
the direct marketing strategy to work more effectively and hit the
precise target
. Furthermore, the collaboration with Disney and several local
artists also improved the performance of sales segment and the total sales.
Target Price of IDR13,750
We use the estimate of forward P/E of 17.7x (1SD lower than the last 3
A Glance at LPPF
LPPF is a retail company running its business through Matahari brand. It was founded in
1958 as the children apparel situated in Central Jakarta. Its businesses covering retail
sales, consignment, and service revenues
target the low to middle income classes
.
Having 156 stores situated in across Indonesia, it dominates the retail market share in
Indonesia.
It performs expansion by launching new stores and developing the online platform with a
view to strengthening its market share. Moreover, it also implements the strategy
perfecting marketing and merchandising program with a view to strengthening its market
penetration.
Indonesia’s Retail Industry in ASEAN
Indonesia is the home to biggest population in ASEAN. It develops Indonesia into the
lucrative market for the retail business
. LPPF, RALS, MAPI with their stores across
Indonesia dominate the retail market in Indonesia.
The retail industry in ASEAN market is sluggish, for instance it marks the negative sales
growth figures in Singapore and Thailand. This backdrop causes the retailers in ASEAN to
strictly curb the operational cost
with a view to balancing market. Nonetheless, in 2017,
most of retailers consistently posted high price
-
earnings ration and two
-
digit ROE.
In Indonesia, Aprindo targets the growth of 9% in 2018’s retail business. In the margin
side, the
retailers in Indonesia are capable of posting higher margin
than are its peers in
ASEAN.
ASEAN Retailers
Source: Bloomberg, NHKS research
Company
Market Cap
(USD mn)
Total Asset
(USD mn)
Growth
Sales
Margin
Gross
Operating
Margin
ROE
P/E
P/BV
Dividend
Yield
Source: Company, NHKS research
Source: Company, NHKS research
Source: Company, NHKS research
SSSG | 1Q14
-
4Q17
Operational Performance
Sales | 2014
-
2017
Number of Stores | 1Q15
-
4Q17
Source: Company, NHKS research
SSSG by Region | 1Q15
-
4Q17
Source: Company, NHKS research
Source: Company, NHKS research
Multiple Valuation
Forward P/E band | Last 3 years
Dynamic Forward P/E band | Last 3 years
Rating and target price
Date
Rating
Target Price
Last Price
Consensus
vs Last Price
vs Consensus
03/02/2018
Buy
13,750
10,800
12,751
+27.3%
+7.8%
Closing and Target Price
Source: NHKS research
Analyst Coverage Rating
Source: Bloomberg
Source: NHKS research
Source: NHKS research
NH Korindo Sekuritas Indonesia (NHKS) stock ratings
1.
Period: End of year target price
2.
Rating system based on a stock’s absolute return from the date of publication
Buy
: Greater than +15%
Hold
:
-
15% to +15%
Sell
: Less than
-
15%
Summary of Financials
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This report and any electronic access hereto are restricted and intended only for the clients and related entity of PT NH Korindo Sekuritas Indonesia. This report is only for information and recipient use. It is not reproduced, copied, or made available for others. Under no circumstances is it considered as a selling offer or solicitation of securities buying. Any recommendation contained herein may not suitable for all investors. Although the information here is obtained from reliable sources, it accuracy and completeness cannot be guaranteed. PT NH Korindo Sekuritas Indonesia, its affiliated companies, respective employees, and agents disclaim any responsibility and liability for claims, proceedings, action, losses, expenses, damages, or costs filed against or suffered by any person as a result of acting pursuant to the contents hereof. Neither is PT NH Korindo Sekuritas Indonesia, its affiliated companies, employees, nor agents liable for errors, omissions, misstatements, negligence, inaccuracy arising herefrom.
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LPPF Summary
Last Price (IDR) 10,800
Target Price (IDR) 13,750 2016/12A 2017/12A 2018/12E 2019/12E
